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TMI Blog2022 (2) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... n while computing total income. 2. That the learned CIT(A) has erred in law and facts by confirming the Disallowing of claim of Rs. 1,05,03,034/- and therefore the learned AO should be directed to allow the said claim while computing the total income. 3. That the learned AO has initiated penalty proceedings u/s 271(1)(c) of the Act and therefore the learned AO be directed to drop the penalty proceedings. 4. The appellant craves liberty to add, amend, alter and delete any grounds of appeal before the final hearing" 3. Ground No. 1 relates to addition on account of employees contribution to PF under Section 36(1)(va) to the tune of Rs. 53,83,721/-. 4. At the time of hearing of the instant appeal the Ld. Counsel appearing for the assessee submitted before us that admittedly the issue has been decided against the assessee by the Hon'ble Jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation (GSRTC), reported in 366 ITR 170 (Gujarat). However, he has further submitted that on the identical issue the Hon'ble Jurisdictional High Court in the case of Deco Mica Ltd. vs. DCIT, Circle-1(1)(1) passed order against the assessee with a rider that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court dismiss this ground of appeal preferred by the assessee. 8. The second issue refers to addition on deferred revenue expenditure to the tune of Rs. 1,05,03,034/-. 9. The Ld. AO was of the opinion that the assessee has not given any justification for such claim of the expenses under Section 35D of the Act and therefore, the same was not allowable. However, the Ld. CIT(A) following the order passed by his predecessor in assessee's own case for A.Ys. 2014-15 and 2015-16 confirmed such addition made by the Ld. AO. 10. At the time of hearing of the instant appeal the Ld. Counsel appearing for the assessee submitted before us that the Coordinate Bench in assessee's own case in ITA No. 2908/Ahd/2016 for A.Y. 2010-11has been pleased to direct the Ld. AO to verify before allowing the deduction of such expenses whether these expenses were treated as deferred revenue expenditure in the earlier assessment years and the same were accepted in the assessment framed under Section 143(3) of the Act. A copy of the said order passed by the Coordinate Bench has been submitted before us by the Ld. AR. 11. On the other hand, the Ld. DR relied upon the order passed by the authorities below. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts as placed before us by the assessee with that of the fact available in the order under reference we do not find any reason to deviate from the stand taken by the Coordinate Bench and therefore, respectfully relying upon the same we allow this ground of appeal by directing the Ld. AO to verify the same in the light of the decision given by the Coordinate Bench in the A.Y. 2010-11and to allow the claim accordingly upon giving a reasonable opportunity of being heard to the assessee. This ground of appeal is, therefore, allowed for statistical purposes. ITA No. 1284/Ahd/2019 (A.Y. 2016-17):- 14. Grounds of appeal raised by the Revenue are as under: "1. The Ld. CIT(A) has erred in law and on facts in deleting the disallowance made by the AO in respect of assessee's claim of foreign Commission payment of Rs. 2,03,22,569/-. 2. The CIT(A) has erred in law and on facts in deleting the disallowance u/s. 14A contrary to the CBDT Circular 5/2014. 3. The appellant craves leave to amend alter any ground or add a new ground, which may be necessary." 15. Ground No. 1 relates to disallowance made by the Ld. AO in respect of the assessee's foreign Commission payment of Rs. 2,03,22,569 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... road. Therefore such receipt of the foreign agent cannot be said to have accrued or arisen in India. Further it has submitted form15CA and 15CB to the department at the time of making payment in which no tax liability was calculated. Thus it has no liability to deduct tax on such payment. The assessee in this regard also placed reliance on the order of the co-ordinate bench of this ITAT in ITA No 3065/Ahd/2010 of Pankaj A. Shah vs. ITO. 32. Further the Assessee submitted that the Double Taxation Avoidance Agreement stipulate where there is DTA Agreement between India and resident country of party to whom payment made then such income will be taxed in India only in the case such party is having permanent establishment India. Accordingly the assessee submitted that there is tax treaty between India and UAE which has been notified vide notification number GSR 356(E) dated 21-04-1995. Therefore it was not liable to deduct tax on such payment of commission. 33. The learned CIT (A) after considering the facts in totality directed the AO to verify nature of services received and allow the claim accordingly by observing as under: It is the submission of the appellant before the AO th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) that tax was not deducted because such income was not liable to be taxed in India. It was submitted that the commission paid to foreign agents for providing services outside India and they were not having permanent establishment or business connection in India. Therefore such payment is not income accruing or arising in India within the meaning of section 9 of the IT Act. It was also explained that non-residents were not chargeable to tax in India due to Double Taxation Avoidance Agreements. However, the learned CIT (A) observed that the nature of services were not explained by the assessee. Accordingly the learned CIT (A) directed the AO to verify the nature of services and allow the claim if commissions were paid for procurement of sales otherwise disallow the same if commission paid for services provided in nature of managerial or technical know-how as provided under section 9 of the Act. 38. At the outset we note the assessee before authorities below only contended that the agents have no establishment or business connection in India and payments were made outside India. As such the assessee has not substantiated the nature of services provided by the foreign agent. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IV, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. Since in the instant case, the appellant did not make any claim for exemption of any income from payment of tax and the appellant on his own has made disallowance of Rs. 42,96,550/-, no further disallowance is called for u/s. 14A. 5.6. In view of the aforesaid discussion, it is found that the appellant has not claimed any exempt income, and therefore, the provisions of section 14A of I. T. Act, 1961 are not applicable in view of judgment of Hon'ble Gujarat High Court in the case of CIT Vs. Corrtech (Supra). 5.7. Recently Honourable Delhi High Court in the case of IL&FS Energy Development Co. Ltd. [84 Taxmann.com 186] dated 22/08/2017 has also affirmed the above view. 5.8. In view of the aforesaid discussion, the disallowance made by the AO invoking the provisions of section 14A of the Act is not correct and hence, same is deleted. The ground of appeal is accordingly allowed." Factually the assessee has not claimed for exemption of any income for the payment of tax and of his own made disallowance of Rs. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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